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PSC Rejects Most Of Pepco Rate Increase Request

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ANNAPOLIS, Md. (AP) — Maryland regulators on Friday rejected a large portion of the Potomac Electric Power Company’s request for a 4 percent rate increase, citing the company’s history of substandard performance.

The Maryland Public Service Commission rejected $50 million of the $68 million increase requested by the company. The $18.1 million increase approved by regulators amounts to a $2.02 rise in a typical residential monthly bill, the PSC said. The company’s full request would have meant a $5.56 increase per month.

“Pepco’s ill-advised decision to ignore their accountability and our direction to quantify in this case the extent of their increased reliability spending attributable to their historic system neglect makes us wonder if the company heard us,” the PSC wrote in its order.

The commission said the $18.1 million rate increase was required to meet the legal and statutory mandates set by law to provide safe and reliable service.

The panel also reduced the allowed return to Pepco’s shareholders to 9.31 percent. The previously allowed return was 9.83 percent. Pepco had requested a return rate of 10.75 percent.

“We recognize that Pepco is a regulated electric distribution company, but it seems backward to us to reward Pepco’s shareholders, and impose increased financial burdens and risks on the company’s legitimately aggrieved customers, before Pepco corrects its sub-par performance,” the PSC said in its order.

Pepco, which serves Washington and suburban Maryland, has come under heavy criticism for prolonged delays in restoring power after severe storms, most recently after a strong storm hit Maryland late last month.

Pepco made its rate increase request Dec. 16. The official record for the PSC to review the request closed on June 25, four days before the storm swept through the region and knocked out power for days for many customers.

“Although the outages resulting from the June 29 `derecho’ storm and Pepco’s response to them are not, and cannot be, part of the record or our decision-making process in this case, we recognize that the statutory deadline for this decision comes at an unfortunate time,” the PSC said in a statement.

The commission also denied Pepco’s requests for a new infrastructure pre-payment surcharge. The panel found that would place new burdens on ratepayers and force them to take financial risks that should be shouldered by Pepco.

Pepco said in an emailed statement that it would “not have any comment until we have reviewed it.”